Dynamic agency with feedback

Taub, B. (1997) Dynamic agency with feedback. Rand Journal of Economics, 28(3), pp. 515-543.

Full text not currently available from Enlighten.


A principal has a stochastically evolving target that he wishes an agent to repeatedly hit with his effort. The agent does not obtain utility from hitting the target and therefore attempts to shirk; the agent's utility is determined by a second process that symmetrically is of no use to the principal. The principal cannot control effort or payoffs but can transmit signals to the agent, who is relatively uninformed. The principal's optimal signal may cause the agent's labor to be highly serially correlated. This serial correlation has empirical relevance for the theory of managerial incentives and for the theory of business cycle fluctuations.

Item Type:Articles
Glasgow Author(s) Enlighten ID:Taub, Professor Bart
Authors: Taub, B.
College/School:College of Social Sciences > Adam Smith Business School > Economics
Journal Name:Rand Journal of Economics

University Staff: Request a correction | Enlighten Editors: Update this record